Bombay High Court
Manu Bharati Cooperative Housing ... vs Commissioner Of Income Tax on 22 January, 1986
Equivalent citations: [1986]162ITR693(BOM)
JUDGMENT Masodkar, J.
1. This appeal questions the eventual acquisition of property by the revenue-respondent on the ground that conveyance-deed evidenced by registered document of 12-2-1974 of Plot No. 127, Swami Vivekanand Road, Vile Parle, bearing revisional survey No. 212, was for inadequate consideration and, therefore, it was liable to be acquired. Order for such acquisition under s. 269F(6) of the IT Act 1961, has been made and that order made by the Competent Authority has been upheld by the Income-tax Appellate Tribunal, 'C' Bench, Bombay. Against that the present appeal has been filed.
2. We may, at the outset make the position clear, in that apart from the merit the ld. Counsel appearing for the appellant relied on a Division Bench judgment of this Court in Special Civil Applications Nos. 1628 of 1973, 1629 of 1973, 1630 and 1631 of 1973, decided on 6-2-1981, so as to contend that the proceedings initiated are liable to be quashed as not being in accordance with law, including the inititial notice being bad and not warranted by the provision of law. In that judgment this Court has, indeed, struck down such notices and consequent proceedings for the purpose of acquisition of the properties. Similarly, on the basis of that judgment, it was pointed out that the proceedings were not initiated within nine months from the date of sale, and reliance was placed on the communication of 8-10-1985 which showed that the concerned Gazette was available for public sale on 9-12-1974. The submission of the ld. Counsel is that both these grounds go to the root of the matter and as has been held by this Court in the group of those cases, the proceedings in acquisition are entirely vitiated.
3. The defects that go to the root of the jurisdiction, as have been pointed out in that judgment, appear to be available in the present case also. And applying the ratio of that judgment, the proceedings for acquisition under s. 260F(6) of the IT Act, 1961, would be rendered invalid. That would be enough so as to allow the appeal.
4. However, we are also satisfied in the present case that on the admitted positions as to valuation and consideration, the orders are unsustainable.
5. The judgment under appeal shows that eventually the Tribunal was minded to come to the conclusion that the value of the property, including the scrap value of the building, could be worked in the sum of Rs. 4,59,365. This value which includes the land value at Rs. 200 per square yard is noted in paragraph 19 of the order of the Tribunal. In paragraph 4 of the order, while referring to the competent Authority's valuation, we find that the land value was worked out at Rs. 225 per square yard and the value of the building as scrap value at Rs. 39,165, the total being Rs. 5,11,890. Under the conveyance-deed it is not in dispute that the vendor has to pay and he did pay a consideration of Rs. 2,00,000. It is further not in dispute that the property was tenanted property and by reason of the claims of the tenants with regard to the property, the liability undertaken by the purchaser was to provide alternative accommodation to the tenants that works out to Rs. 2,66,000. These positions and quantums are not in dispute on behalf of the revenue. If these figures are kept in view for the purpose of the transaction as against the property, it is not disputed that the purchaser would be out of pocket by Rs. 4.66.000, which includes the consideration paid for the actual purchase of the property. The valuation worked out against such a liability undertaken, in our view, would not be unfair or inadequate.
6. Mr. Page for the revenue, however, argued that the capitalised value of the standard rent which is worked out at Rs. 79,800 will have to be taken as a credit so as to find out the market value. In his submission, therefore, if that amount is deducted, Rs. 1,86,200 will be the amount which would be the additional liability apart from the amount of Rs. 2,00,000 payable under the document. In other words, Mr. Page for the revenue contended that the total liability under the transaction would be Rs. 3,86,200 and that keeping the figure of Rs. 4,59,365, which gives the land value at Rs. 200 per square yard, the transaction will be within the mischief of s. 269C(2)(a) of the IT Act, 1961.
7. We are unable to agree. If, for all purposes and as is not in disputs, a purchaser is required to be out of pocket in a given transaction by the amounts apart from the consideration. Such amounts will have to be give due credit while considering the fairness of the transaction. In this case giving deduction for the compensation to the tenants from the notional value, the Competent Authority as well as the Tribunal have worked out the figures which are available in paragraphs Nos. 4 and 19 of the order of the Tribunal. It is not in dispute that the consideration paid for the purchase of the property is Rs. 2,00,000, while the liability to provide alternative accommodation to the tenants is undertaken by the purchaser and its value is worked out notionally to the tune of Rs. 2,66,000. Keeping in view that the property was tenanted and further that the proceedings leading to the compromise with the tenants were required to be initiated where under alternative accommodation was required to be constructed and provided to the tenants, it is obvious that the figures worked out are just the estimates, though admittedly put at Rs. 2,66,000 and on that basis notionally the market value is arrived at. When such approximates are worked out for the purpose of market value, the fluctuations therein cannot be ignored. For testing unfairness of the transaction under the Circumstances, and on the admitted facts it would not be enough then to rely only on the figure of consideration stated in the document. Even the estimates have variables. It cannot be forgotten that the land value has been worked out by the valuer of he assessee at Rs. 160 per square yard, while by the Competent Authority it has been worked out at Rs. 225 per square yard and the Tribunal was willing to reduce it to Rs. 200 per square yard. Looking to the occupation of the property by tenants and also the predicament which is noted 9n paragraph 19 of the order of the Tribunal, estimates can further be reduced than the value at Rs. 200 per square yard. Depending upon several considerations which exist in the present case, the value of he land at Rs. 180 per square yard would not be unrealistic. And upon that basis, we do not think that this was a fit case where all the requirements of s. 269C(a) of the IT Act, 1961, could be said to have been established. Even if we were to reduce notionally the land value by 10 per cent, the transaction would not be within its mischief by reason of the admitted liability of providing the alternative accommodation to the tenants as a part of the transaction. It is not suggested by the revenue that was not the liability so undertaken by the purchaser or that liability should not be considered. For all purposes, that liability is treated as the part of the transaction undertaken the purchaser. Even such a case of such accommodation is notionally worked out. Under the circumstances, wherefore, no clear case existed for finding out that the market value of the property exceeded the apparent consideration in the conveyance deed by more than 25 per cent.
8. For all these reasons, and particularly on the strength of the earlier judgment of this Court referred to above, the present appeal is allowed and the orders impugned are set aside. There would be no order as to costs. The Civil Application is, thus, allowed.